To determine the total amount of dividends to be paid, we need to calculate the dividends for both preferred and common shareholders separately.

Preferred Shareholders' Dividends

The preferred stock is noncumulative and pays a 5% annual dividend on its $60 par value.

1. Par value per preferred share: $60
2. Number of preferred shares: 5,500
3. Dividend rate: 5%

The dividend for preferred shareholders is calculated as follows:

$\text{Preferred Dividend} = \text{Number of Shares} \times \text{Par Value per Share} \times \text{Dividend Rate}$ $= 5,500 \times 60 \times 0.05$ $= 5,500 \times 3 = 16,500$

So, the total dividend for the preferred shareholders is $16,500.

Common Shareholders' Dividends

The common shareholders are to receive a dividend of $5 per share.

1. Number of common shares: 51,000
2. Dividend per share: $5

The dividend for common shareholders is calculated as follows:

$\text{Common Dividend} = \text{Number of Shares} \times \text{Dividend per Share}$ $= 51,000 \times 5 = 255,000$

So, the total dividend for the common shareholders is $255,000.

Total Dividends

The total dividend amount to be paid to both preferred and common shareholders is:

$\text{Total Dividend} = \text{Preferred Dividend} + \text{Common Dividend}$ $= 16,500 + 255,000 = 271,500$

Summary

• Total dividends for preferred shareholders: $16,500
• Total dividends for common shareholders: $255,000
• Total dividends to be paid: $271,500

Would you like more details on any part of the calculation?

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Here are 5 related questions for further exploration:

1. How would the dividends change if the preferred stock was cumulative?
2. What is the impact on retained earnings due to the dividend payment?
3. How would the dividend be distributed if the company decided to issue a stock dividend instead?
4. How would the calculation change if the dividend per share for common stock was different?
5. What are the tax implications of dividend distributions for shareholders?

Tip: Remember, noncumulative preferred shareholders do not receive dividends in arrears from previous years. Only the current year's dividend is considered.